More Employees QUIT Their Jobs As Economy Improves


One sign of better economic times is when more people start finding jobs. Another is when they feel confident enough to quit them.

More people quit their jobs in the past three months than were laid off – a sharp reversal after 15 straight months in which layoffs exceeded voluntary departures. The trend suggests the job market is finally thawing.

Some of the quitters are leaving for new jobs. Others have no firm offers. But their newfound confidence about landing work is itself evidence of more hiring and a strengthening economy.

“There is a century’s worth of evidence that bears out this view that quits rise and layoffs fall as the job market improves,” said Steven Davis, an economist at the University of Chicago.

Still, the number of people quitting their jobs is nowhere near what it was before the recession. Economists expect the improvement in the job market to be fitful, rather than consistent. In May, for example, private employers added only 41,000 net jobs after adding 218,000 in April.

Yet the long-term trend points to an improving job market. The economy has created a net 982,000 jobs this year after a recession that wiped out more than 8 million of them.

The government said Tuesday that the number of people quitting rose in April to nearly 2 million. That was the most in more than a year and an increase of nearly 12 percent since January. That compares with 1.75 million people who were laid off in April, the fewest since January 2007, before the recession began.

During the depths of the recession, workers were hesitant to quit – and not only because jobs were scarce. Even if they found a new job, some feared that accepting it would leave them vulnerable to a layoff. At many companies, layoffs follow a simple formula: Last hired, first fired.

Many clung to their jobs out of fear, said David Adams, vice president of training at Adecco, a national staffing agency. When Adecco tried to recruit workers to fill open positions, it frequently ran into the same obstacle: Few workers felt like betting on a new job that might soon disappear.

Not so much any more. Adecco is seeing more employed workers seeking interviews, rather than laid off workers searching for a lifeline.

“The hangover is kind of over,” Adams said. “It’s really starting to move toward a market where the employee can have a lot more confidence making a move.”

That’s why Katie Charland just quit her job at a parenting magazine in Phoenix to take a position with a nonprofit that supplies children’s educational programs.

Charland, 27, says the position is a dream job. Still, it carries a cost: She’s abandoning seniority at her old job. But she thinks the economy is expanding enough that her company will be able to attract state and corporate funding.

“I don’t see leaving my current job to pursue this as a risk,” Charland says. “I do feel like the economy is getting better, and there’s more opportunity out there.”

Such optimism was rare in 2008 and 2009, when employers cut more than 8 million jobs, sending the unemployment rate to a 26-year high of 10.1 percent. The number of people who quit fell 40 percent to 1.72 million in September 2009. That was the fewest since the government began tracking the data in 2000. It was down from nearly 2.9 million in December 2007, when the recession began.

Studies have shown that worker morale fell during the recession. Productivity rose as companies squeezed more work out of their employees. That points to a reason quits may keep rising: Overworked employees could jump at the chance to switch jobs as new opportunities arise.

“There is going to be a mass exodus of the top performers as the economy starts to turn around,” predicts Razor Suleman, a consultant who helps companies retain their best workers.

About 25 percent of companies’ top performers said they plan to leave their current job within a year, according to a survey published in the May edition of the Harvard Business Review. By contrast, in 2006, just 10 percent planned to leave their jobs within a year. The survey questioned 20,000 workers who were identified by their employers as “high potential.”

Companies retained those workers during the recession but heaped more work on them, said Jean Martin, the study’s co-author and executive director of the Corporate Executive Board’s Corporate Leadership Council in Washington. At the same time, employers cut back on awards and bonuses, she said.

Now, top performers at some companies are heading for the exits as hiring picks up. It means companies will feel more pressure to retain them.

“These rising stars know what they’re worth,” Martin said. “They feel somewhat neglected.”

Phil Edelstein can attest to that. He spent two years on his first job at an advertising agency gaining more responsibility but no pay raises.

Edelstein, 25, worked for an agency in Philadelphia that was stretching its budget as clients cut back their spending. After researching clients’ brand names and marketing strategies, he moved on to directing study projects.

Bosses kept promising a pay raise commensurate with his workload. It never came.

“There’s this intense frustration that comes with that, because you basically feel like you have no control over how much money you’re making and how much work you do,” he said.

Edelstein hung tight through 2009 as the economy shed jobs. But this year he began sending out resumes to other ad agencies. Then a prospective client called. The CEO of a Colorado-based tea maker needed a marketing director. Edelstein didn’t need long to say yes.

“It felt good, because I was initiating the change,” he said.

More people are now taking a leap that few dared just a few months ago: Quitting without a new job waiting. The improving economy has given them confidence.

Robert Dixon is among them. He was consulting with companies doing business in China, helping them establish supply chains with factories there. But he tired of spending weeks at a time away from his wife in Massachusetts. So in May he quit – without a backup plan.

“Somebody the other day said to me I was the first person they’d met who quit a good-paying job without another one to go to,” Dixon said. “I know there are other companies out there. I just need to find them.”


College For All? Experts Say Not Necessarily


COLUMBIA, Mo. — In a town dominated by the University of Missouri’s flagship campus and two smaller colleges, higher education is practically a birthright for high school seniors like Kate Hodges.

She has a 3.5 grade-point-average, a college savings account and a family tree teeming with advanced degrees. But in June, Hodges is headed to the Tulsa Welding School in Oklahoma, where she hopes to earn an associate’s degree in welding technology in seven months.

“They fought me so hard,” she said, referring to disappointed family members. “They still think I’m going to college.”

The notion that a four-year degree is essential for real success is being challenged by a growing number of economists, policy analysts and academics. They say more Americans should consider other options such as technical training or two-year schools, which have been embraced in Europe for decades.

As evidence, experts cite rising student debt, stagnant graduation rates and a struggling job market flooded with overqualified degree-holders. They pose a fundamental question: Do too many students go to college?

“College is what every parent wants for their child,” said Martin Scaglione, president and chief operating officer of work force development for ACT, the Iowa-based not-for-profit best known for its college entrance exam. “The reality is, they may not be ready for college.”

President Barack Obama wants to restore the country’s status as the world leader in the proportion of citizens with college degrees. The U.S. now ranks 10th among industrial nations, behind Canada, Japan, Korea and several European countries.

But federal statistics show that just 36 percent of full-time students starting college in 2001 earned a four-year degree within that allotted time. Even with an extra two years to finish, that group’s graduation rate increased only to 57 percent.

Spending more time in school also means greater overall student debt. The average student debt load in 2008 was $23,200 – a nearly $5,000 increase over five years. Two-thirds of students graduating from four-year schools owe money on student loans.

And while the unemployment rate for college graduates still trails the rate for high school graduates (4.9 percent versus 10.8 percent), the figure has more than doubled in less than two years.

“A four-year degree in business – what’s that get you?” asked Karl Christopher, a placement counselor at the Columbia Area Career Center vocational program. “A shift supervisor position at a store in the mall.”

At Rock Bridge High School, one of Columbia’s two high schools, 72 percent of the class of 2008 moved on to four-year colleges, with another 10 percent attending community college. That college attendance rate is consistent with national statistics.

Only 4 percent of Rock Bridge students chose technical training like the Oklahoma welding school where Hodges is headed.

Roughly 1,200 students from central Missouri take classes at the career center, supplementing their core high school courses with specialized training in automotive technology, culinary arts, animal science, robotics, landscape design, electrical wiring and more.

Hodges has been set on a welding career since she was 13. She craves independence and has little patience for fellow students who seem to wind up in college more from a sense of obligation than anything else.

“School is what they’ve been doing their whole lives,” she said. “So they just want to continue. Because that’s what they are used to.”

Sue Popkes doesn’t hide her disappointment over her younger daughter’s decision. At the same time, she realizes that Hodges may achieve more financial security than a college degree could ever provide.

“It’s sad to know she’s going to miss that mind-opening effect of an undergraduate degree,” Popkes said. “To discover new ideas, to become more worldly.”

Ohio University economics professor Richard Vedder blames the cultural notion of “credential inflation” for the stream of unqualified students into four-year colleges. His research has found that the number of new jobs requiring college degrees is less than number of college graduates.

Vedder’s work also yielded something surprising: The more money states spend on higher education, the less the economy grows – the reverse of long-held assumptions.

“If people want to go out and get a master’s degree in history and then cut down trees for a living, that’s fine,” he said, citing an example from a recent encounter with a worker. “But I don’t think the public should be subsidizing it.”

Margaret Spellings, former federal education secretary under George W. Bush, remains a strong proponent of increased college access. She points to research showing that college graduates will on average earn $1 million more over a lifetime than those with only high school degrees.

“It is crucial to the success of our country and to us as individuals to graduate more students from college,” she said at a National Press Club forum earlier this year. “We Americans greatly believe that education is the great equalizer.”

For many, the dream of earning a college degree – and the social acceptance that comes with that accomplishment – trumps a more analytical, cost-benefits approach.

John Reynolds, a Florida State sociology professor, found that unrealized educational expectations do not lead to depression or other long-term emotional costs.

“Rich kids, poor kids, ‘A’ students, ‘C’ students – we really didn’t find any lasting impact on not getting the degree,” he said.

Scaglione suggested that nothing short of a new definition for educational success is needed to diminish the public bias toward four-year degrees. He advocates “certification as the new education currency – documentation of skills as opposed to mastering curriculum.”

“Our national system is, ‘Do you have a degree or not?'” he said. “That doesn’t really measure if you have skills.”

The Real Misery Index April 2010: Underemployment Woes Lead To Two-Tier Economy

By Marcus Baram

The unemployment crisis continues to stymie a full economic recovery, with ripple effects from credit card delinquencies and rising food stamp participation indicating new hardships for millions of Americans, according to the latest update of Huffington Post’s Real Misery Index.

The index for March/April 2010 was 33.1, a slight increase from 33.0 in February, representing another new high in the 26 years going back to 1984 analyzed by HuffPost. Though there have been some encouraging signs, from higher housing prices (which have an inverse relationship to the index) to declining home equity delinquencies, the jobless numbers continue to increase the misery. In addition, nearly 40 million American were enrolled for food stamps in February, which has been described by anti-hunger groups as the highest share of the population ever in the assistance program.

Though the Real Misery Index has increased 16% from March 2009 to April 2010, the stock market has increased 56% during that period, reflecting an alarming discrepancy between the two metrics.

Lynn Reaser, the incoming president of the National Association of Business Economists, calls it a two-tier economy, with those who are employed doing better amid rising consumer confidence while the unemployed suffer.

Stock prices, meanwhile, are driven by the behavior of investors, who make up a small portion of the population — not those who are underemployed, says Karen Dynan, the vice president of economic studies at the Brookings Institution.

She notes that employment tends to be a lagging indicator, meaning that it is one of the last numbers to turn around during a recovery, and that the stock market has a forward-looking predictive element to it. The hope is that a rising stock market will “stimulate spending and that will eventually create more jobs,” she says.

To formulate our index, which provides a better snapshot of the economy than the often-criticized misery index (inflation added to unemployment), we used a more accurate unemployment statistic (the U6 formulation), with the inflation rate for three essentials (food and beverages, gas, medical costs), and year-over-year percent changes in credit card delinquencies, housing prices, food stamp participation, and home equity loan deficiencies. We gave equal weight to the broad unemployment numbers and the combination of the other seven metrics (with housing prices having an inverse relationship to the index). Thus, we added the broad unemployment U6 statistic (note: the current U6 was first introduced in 1994 so we used a similar number — the U7 — for the years 1985-1993) to the average of the seven other statistics.

Health IT funding to create 50,000 jobs

Sixty regional IT help centers will help health care facilities implement electronic medical records

By Lucas Mearian
BOSTON — Federal dollars being pumped into grant programs to spur students to enter IT careers in the health care industry should help to create between 45,000 and 50,000 jobs over the next five years, a top federal health official said on Thursday.Speaking at the Health Information Technology (HIT) Conference here, Dr. David Blumenthal, National Coordinator for Health Information Technology, said a portion of $2 billion in discretionary spending under Office of the National Coordinator (ONC) is being targeted at education and training for electronic health record implementation.

A large part of the training is for people to staff 60 regional extension centers, which are public, private partnerships that will assist rural hospitals and physician practices with 10 or fewer doctors in rolling out electronic medical records (EMRs) and supporting technology.

“There’s a shortage of workers who can staff these regional extension centers and provide the kind of support physicians and hospitals need to become meaningful users” [of EMRs], Blumenthal said.

Without specifying an amount, Blumenthal said the ONC has already handed out funding to 70 community colleges or other universities to create programs for workforce training for health information technology.

The HIT conference, hosted by the Massachusetts Health Data Consortium, focused not only how to create jobs in health information technology, but how that technology can reduce health costs while improving quality of care.

The ONC has released a 556-page draft rule that contains specifications and certification criteria for EMRs. Those rules, now available for public comment, set a four-year timeline beginning in 2011 for implementing the systems; they also spell out best practices.

A final version of the government’s Notice of Proposed Rule Making helps define what type of technology should be used and spells out how $36 billion in incentives from the American Recovery and Reinvestment Act of 2009 should be paid out. A physician in private practice can receive up to $44,000 for rolling out EMRs and showing “meaningful use” of that technology.

Hospitals could potentially received millions of dollars in reimbursement.

Physicians and hospitals that don’t roll out the EMR technology and prove that they are making “meaningful use” of it by 2015 face penalties in the form of reduced Medicare reimbursements.

Blumenthal also said an advisory committee he formed to investigate reports from members of Congress and the press that EHRs had cause some “adverse events and patient injuries” reported back to him about three weeks ago. He said the committee recommended collecting more information and that the ONC further study safety problems associated with EHRs, “and make sure we proceed thoughtfully and carefully.”

Blumenthal said nothing the committee found had given it any pause as to the trust that the government, including Congress, had in the ONC’s policies surrounding the rollout of EHRs.

“There was no question that the introduction of electronic health systems improve patient safety. The issue was how do we introduce those systems in ways that are as safe as possible,” Blumenthal said.

The ranking member of the U.S. Senate Finance Committee has asked 31 hospitals and health-care systems to provide feedback on problems with computer systems associated with the government’s efforts to incent the rollout of EHRs.

The government has uncovered prescription errors related to EHR systems that have been rolled out in private-sector hospitals. Sen. Charles E. Grassley (R-Iowa), sent a letter in January to some of the nation’s largest health care facilities asking for any information on “issues or concerns that have been raised by your health care providers” over the past two years.

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U.S. GDP Up 3.2% In First Quarter, Consumer Spending Shows Biggest Rise In 3 Years


WASHINGTON — The economy grew at a solid 3.2 percent pace during the first quarter of this year as consumers boosted their spending by the most in three years.

The Commerce Department’s initial estimate of the economy’s performance in the January-to-March quarter, released Friday, provided more evidence that the economy is strengthening. It marked the third straight quarterly gain as the United States heals from the longest and deepest recession since the 1930s. Still, growth was weaker than in the fourth quarter of last year, when the economy grew at 5.6 percent.

Consumers rebounded and powered the first-quarter’s growth. They increased their spending at a 3.6 percent pace, the strongest showing since early 2007 – before the economy tipped into a recession. That marked a big improvement from the fourth quarter when consumer spending grew at a lackluster 1.6 percent pace.

In the first quarter, consumers spent more on things like home furnishings and household appliances, recreational goods and vehicles, clothing, and going out to bars and restaurants.

Even though consumers aren’t spending as freely as they normally do early in strong economic recoveries, they are spending sufficiently to keep the economy expanding.

Looking ahead, analysts believe consumers will be wary of stepping up spending much further. The unemployment rate is high at 9.7 percent and is expected to stay elevated in the months ahead. Sluggish income growth and problems getting loans could restrain shoppers’ appetite to spend, they say.

“The economy is moving ahead at a decent pace. That’s good. But there are headwinds out there for consumers that probably will restrain growth going forward. Are those headwinds going to disappear any time soon? My guess is no,” said Joel Naroff, president of Naroff Economic Advisors. He predicts consumer spending will slow in the current April-to-June quarter to about a 2 percent pace.

Just 21 percent of Americans consider the economy in good condition, according to an Associated Press-GfK Poll conducted April 7-12.

Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.

The outlook for moderate growth this year means unemployment will stay high – in the 9 percent range – by the November congressional elections. The prospects for high joblessness are a political liability for incumbent Democrats and Republicans.

The first quarter’s reading on gross domestic product was a tad shy of the 3.4 percent growth rate economists were forecasting. GDP measures the value of all goods and services – from machinery to manicures – produced within the United States. It is the best barometer of the nation’s economic health.

Businesses did their part to help the economy grow in the first quarter. Spending by the federal government helped, too.

Spending by businesses on equipment and software rose at a brisk 13.4 percent pace, following an even bigger 19 percent growth rate in the fourth quarter.

The federal government increased spending at a 1.4 percent pace, after being flat in the prior quarter.

Companies started to restock inventories shrunken during the recession, helping boost factory production and GDP.

Exports grew at a slower pace in the first quarter, while imports rose much faster – reflecting stronger demand by U.S. consumers. That meant the nation’s trade deficit acted as a small drag to GDP in the first quarter. Slower export growth probably reflects less demand coming from major trading partners in Europe because of the debt crisis there, analysts say.

Problems in the real estate market slowed economic activity.

Builders once again trimmed spending on housing projects, following two quarterly gains. Spending on commercial real estate ventures plunged at a 14 percent pace, the seventh straight quarterly decline.

And state and local governments continued to trim spending, a move some analysts expect to continue for years.

Despite pockets of weakness, multiple signals suggest the U.S. economy has turned a corner.

Employers are creating jobs again – a net total of 162,000 jobs in March, the most in three years. Manufacturers are boosting production. Consumer confidence is higher.

And a rising number of companies – from Ford, Caterpillar and Whirlpool to UPS, Estee Lauder and Royal Caribbean Cruises – are seeing profits grow. General Electric says the “clouds are breaking” after having suffered one of its worst years in 2009.

By his best bet, Federal Reserve Chairman Ben Bernanke says the economy will log moderate growth.

Economists in a recent AP Economy Survey predict the economy will pick up some speed, growing at a rate of 3.7 percent in the April-to-June quarter.

For 2010 as a whole, economists in the AP survey predict the economy will grow 3.1 percent. That’s an improvement from the 2.4 percent decline in 2009, the worst since 1946. But much stronger growth in the 5 percent range is needed for a full year just to drive down the unemployment rate by just 1 percentage point.

Economists Optimistic About Economy, Job Creation


NEW YORK — Economists are more optimistic about prospects for growth this year as industries increasingly report better profits and add new jobs, though they still expect the recovery to remain slow, a new survey shows.

Seventy percent of those recently surveyed by The National Association for Business Economics believe real GDP will grow by more than 2 percent this year, up from 61 percent who said the same in January. Twenty-four percent are predicting real GDP will grow by more than 3 percent in 2010, up from 14 percent earlier this year.

“Industry demand moved higher compared to results in the January 2010 report, pointing to stronger growth in 2010,” said William Strauss, a senior economist at the Federal Reserve Bank of Chicago. “After more than two years of job losses, job creation increased in the first quarter of 2010, suggesting a better outlook for hiring over the next six months.”

The NABE forecast, set to be released Monday, shows fewer jobs are being shed, more are being created and more companies are making money.

The findings echoed results issued by Conference Board last week for its index of leading economic indicators. The figure jumped 1.4 percent in March, suggesting economic growth is likely to continue for the next three to six months. The growth was at its fastest pace in 10 months. Government data also showed that employers in March added 162,000 jobs, the most in three years.

The survey of 68 NABE members from private sector and industry trade associations takes into account first-quarter results and near-term outlook.

With industry demand on the rise for the third straight quarter, 37 percent of respondents plan to increase employment in the next six months, up from 29 percent in January. The net employment outlook index – job additions minus all cuts over the next six months – soared to 21 from 6 in the survey, with fewer respondents saying they planned to reduce staff through either attrition or layoffs. However, the bulk of employers – 46 percent, down from 48 percent – still plan no change to staffing levels.

By sector, the financial, insurance and real estate industries along with the service industry have had the most positive employment trends and continue to going forward. The jobs outlook in manufacturing has improved, respondents said, but is negative in the transportation, utilities, information and communications industries.

Most respondents – 73 percent – continue to say the year-old, $787 billion federal stimulus plan hasn’t affected employment at their companies.

Wages and salaries also are improving. Respondents reporting higher pay more than doubled to 26 percent, while those reporting a decline in wages slipped to 6 percent from 7 percent in January. The net reading for wages and salaries – planned increases minus planned cuts – was 20, the highest reading since January 2008.

Higher salaries would bode well for the recovery, since consumer spending accounts for as much as 70 percent of U.S. economic activity.

Profit margins continued to grow for the third quarter in a row. The number of respondents reporting rising profits dipped slightly in April to 25 percent from 27 percent in January. But the rate at which profits fell slowed faster, with just 11 percent reporting declines compared with 16 percent in January.

Higher profit margins could indicate that companies might be in a better position to spend more money, which would accelerate the recovery. But the NABE survey showed capital spending plans are holding steady, with one-quarter of respondents planning to boost spending and 15 percent expecting to cut back, roughly in line with January’s numbers. Expectations are positive for spending on computers and communications equipment, but remain negative for construction.

Companies may be holding back on spending as their ability to raise prices significantly remains weak. The NABE survey showed that 18 percent of firms cut prices last quarter instead of raising them, slightly more than in January. In addition, fewer firms expect to raise prices in the coming quarter than had expected to do so.

Materials costs also are on the upswing, with 39 percent reporting rising costs, up from 31 percent in January. And credit conditions continue to hamper businesses. Nearly half of those surveyed said credit conditions were hurting their operations, compared with 35 percent in January.

The survey was taken March 25 through April 10.

Bill Gates and Friends Make Case for Energy R&D

By Alexis Madrigal

Bill Gates and a host of other corporate heavy hitters have founded a new organization to push for more research and development into clean energy technology.

Gates and former DuPont CEO Charles Holliday heralded the launch of the American Energy Innovation Council with an unusually clear and concise argument for increased government support for green tech R&D.

“Despite talk about the need for ’21st century’ energy sources, federal spending on clean energy research is also relatively small. The U.S. government annually spends less than $3 billion — compared with roughly $30 billion annually on health research and $80 billion on defense research and development,” they argued in The Washington Post.

The editorial goes on to lay out why energy technologies deserve government backing. First, they write, “There are profound public interests in having more energy options.” Second, the huge costs associated with developing new energy technologies requires government help. As they put it, “The nature of the energy business requires a public commitment.” And last, they point out that the cheapest electricity comes from the oldest plants, which makes for a conservative industry. “Power plants last 50 years or more, and they are very cheap to run once built, meaning there is little market for new models.”

Gates has shown an increasing interest in energy problems delivering an impressive TED talk this year about the need for low-carbon energy. He has also funded energy startups and geoengineering research.

Many independent groups like The Breakthrough Institute have been pushing for increased energy R&D funding, but none have the roster of heavy hitters of the council. The new organization lists a herd of other corporate leaders behind the effort including Ursula Burns, Xerox CEO, green tech venture capitalist John Doerr, and General Electric CEO Jeff Immelt. Also listed is Norm Augustine, former CEO of Lockheed Martin and head of the Obama Administration’s blue-ribbon panel on NASA and the future of human spaceflight.

While the Gates/Holliday letter and the corporate leadership is impressive, there is little on the group’s sparse website about what exactly they suggest. Instead, the council is reaching out to scientists, policy wonks and others to develop detailed recommendations that will be released “in a few months.”

The Council hired Widmeyer Communications to man their public relations, a mid-size firm that has worked with Coca Cola, Pfizer and a host of government agencies. They also appear to be linked to ClimateWorks, which registered the domain.

Image: The rooftop solar installation at Solyndra, a solar company.
Jon Snyder/

See Also:

WiSci 2.0: Alexis Madrigal’s Twitter, Tumblr, and forthcoming book on the history of green technology; Wired Science on Twitter and Facebook.